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Canopy Growth: New Cannabis 2.0 Products amid COVID-19

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Canopy Growth (NYSE:CGC)(TSE:WEED) still has investors’ attention despite all that the marijuana industry has gone through. After reporting disappointing results for a while, the company’s third-quarter earnings were a delight. Also, Canopy Growth’s strong balance sheet with Constellation Brands’ support gives it an edge. Recently, Constellation Brands exercised its warrants of Canopy Groth shares. The company still has faith that Canopy Growth could emerge in the cannabis space. Amid the COVID-19 pandemic, Canopy Growth announced that it will proceed with more Cannabis 2.0 products. Let’s take a look at the new products.

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Cannabis 2.0: chocolates, beverages, and more

In December 2019, Canopy Growth rolled out the details of its Cannabis 2.0 products, which included chocolates, vape pens, vape cartridges, and beverages. The company even launched quite a few products that management discussed in its third-quarter earnings call.

On May 12, the company provided an update on its already launched products along with upcoming products. Among cannabis-infused beverages, the company shipped Tweed Houndstooth & Soda and Tweed Bakerstreet & Ginger in March and April. They’re THC-infused ready-to-drink beverages. The company received positive reviews and good consumer demand for the products. Notably, the company shipped more to meet the current demand. Canopy Growth expects to launch two additional beverages, Houseplant Grapefruit and Deep Space, in the coming weeks. The beverages will launch through retail and e-commerce platforms.

About the beverages, CEO David Klein said, “Our beverage innovation team took a flavor-first approach with our drinks, and the first four offerings to hit the market demonstrate the range of our portfolio, with flavor profiles that will satiate our consumers’ palates.”

In the cannabis-infused chocolate category, the company already launched four products—Tokyo Smoke Pause, Tokyo Smoke Go, Tweed Houndstooth & Mocha, and Tweed Bakerstreet & Peppermint—which it discussed in the third-quarter earnings call. Management said that the premium THC-infused bars have been popular with consumers.

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Canopy Growth’s vape products

In the vape category, Canopy Growth has innovative vape pen components including batteries, pods, and 510 cartridges. The products include Tokyo Smoke Luma, JUJU Power, Tweed Houndstooth, and Tweed Bakerstreet. The company has made Tweed’s 510 cartridges and JUJU Power available to medical patients through its Spectrum Therapeutics online store. The company plans to launch Tweed Sativa soon.

Last year, the vape market faced illegal vape devices containing Vitamin E acetate. To meet the challenges, Canopy Growth ensured that its new devices are high-end. The company ensured that the premium distillate in its 510 threaded vape cartridges only consists of cannabis and terpenes—free of polyethylene glycol, vegetable glycerin, or vitamin E acetate.

Besides Cannabis 2.0 products, Canopy Growth also launched its approximately 1 ounce SKUs—Tweed 28 Sativa and Tweed 28 Indica—through its Tweed cannabis brand. The company wanted to offer its consumers high quality and high THC flowers at an affordable price. Canopy Growth thinks that bulk offerings in the recreational cannabis market in Canada will help combat the illegal cannabis market.

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Canopy Growth to report Q4 earnings

Investors and analysts didn’t expect good quarterly numbers from Aurora Cannabis. The company has consistently disappointed investors in the last few quarters. Surprisingly, Aurora Cannabis’s third-quarter results were better than expected. The third-quarter revenue of 78.4 million Canadian dollars beat analysts’ estimate of 66.6 million Canadian dollars. The revenue also grew by 20.3% YoY (year-over-year).

Canopy Growth will likely report its results for the fourth quarter of fiscal 2020 this month. Notably, the third-quarter results were impressive. Despite a rise in marijuana sales, Canopy Growth’s revenue could rise slightly by 4.2% sequentially in the fourth quarter. The revenue could be around 129 million Canadian dollars in the fourth quarter. However, the EBITDA losses could decline to 88.2 million Canadian dollars compared to 91.6 million Canadian dollars in the third quarter. For the fiscal year, analysts expect the revenue to be around 423.87 million Canadian dollars. For fiscal 2020, the EBITDA losses could be around 428 million Canadian dollars.

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Currently, 12 analysts cover Canopy Growth stock. Among the analysts, six recommend a “hold,” three recommend a “buy,” and three recommend a “strong buy.” The average target price on the stock is $23.97. The target price represents an upside potential of 39% from its last closing price. The stock closed higher by 6% at $17.3 on May 19. Aurora Cannabis and Green Thumb Industries’ positive earnings results have been driving the cannabis sector. Most US cannabis companies had a good quarter due to rising cannabis sales. In contrast, Curaleaf (OTCMKTS:CURLF) reported a mixed performance.

Cannabis stocks’ performance

Until now, May had been good for cannabis stocks. Most of the stocks were trading in the green with rising cannabis sales amid the COVID-19 pandemic. Aurora Cannabis’s results and stock performance boosted the sector. In May, Canopy Growth stock has gained 13.3%, while Aurora Cannabis has gained 73.5%. Green Thumb and Aphria (NYSE:APHA) have gained 37.4% and 4.4%, while Cronos Group (NASDAQ:CRON) and Curaleaf have declined by 0.71% and 24.2% in May.

Aurora Cannabis’s stock momentum took a hit after an MKM analyst had a bearish view of the company. On Tuesday, Aurora Cannabis stock closed with a loss of 14.3%, while Canopy Growth closed with a gain of 6.0%. Will Canopy Growth’s fourth-quarter earnings be a surprise too?

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